Peterson v. Jacobs

• Decision Date: 24 November 1942
• Docket Number: No. 91.,91.
• Citation: 6 N.W.2d 533,303 Mich. 329
• Parties: PETERSON v. JACOBS et al.
• Court: Michigan Supreme Court

303 Mich. 329

6 N.W.2d 533

PETERSON

v.JACOBS et al.

No. 91.

Supreme Court of Michigan.

Nov. 24, 1942.

Suit in equity by May Peterson against Henry F. Jacobs and others, trustees for the benefit of former unsecured creditors of the Old-Merchants National Bank & Trust Company of Battle Creek, to set aside a mortgage foreclosure sale and recover possession of mortgaged premises and rental value thereof. Decree for defendants, and plaintiff appeals.

Affirmed. Appeal from Circuit Court, Calhoun County; Blaine W. Hatch, Presiding judge.

Before the Entire Bench.

N. A. Cobb, and Roger H. Nielsen, both of Battle Creek, for plaintiff-appellant.

Cyrus J. Goodrich, of Battle Creek, for defendants-appellees.

BUTZEL, Justice.

Roy X. Tuttle and Olive M. Tuttle, his wife, and Edwin V. Tuttle and Louise B. Tuttle, his wife, on July 7, 1924, gave a mortgage to the Merchants Savings Bank of Battle Creek, Michigan, on a house and lot in Battle Creek, to secure the repayment of a sum of $2,100 three years after date of the mortgage. It provided for interest at the rate of 7 per cent. per annum, with serial payments on principal on interest dates. Interest payments of $73.50 were regularly made up to and including January 7, 1933. No payments have been made since then. On September 28, 1927, the name of the mortgagee was charged to the Merchants Trust and Savings Bank of Battle Creek. On August 31, 1929, the bank was consolidated with the Old National Bank and Trust Company of Battle Creeks, a national banking corporation, which changed its name to Old-Merchants National Bank and Trust Company of Battle Creek. On September 27, 1934, the mortgage was assigned by the latter to Henry F. Jacobs et al., trustees for the former unsecured creditors of the Old-Merchants National Bank and Trust Company of Battle Creek, the defendants herein. They, as assignees of the mortgage, began foreclosure proceedings by advertisement. The notice of foreclosure sale did not contain any mention of an assignment of the mortgage from the Old-Merchants National Bank and Trust Company to the Reconstruction Finance Corporation, hereafter called the R. F. C., and the reassignment from the R. F. C. to Henry F. Jacobs et al., trustees, the defendants herein. All the other assignments, change of name, etc., were duly set forth. The failure to mention the assignment to the R. F. C. and reassignment to the trustees is the only irregularity claimed by plaintiff in the foreclosure proceedings. Defendants purchased the property at the foreclosure sale on August 3, 1935, for the sum of $2,100, the amount of the mortgage, and took possession a year later. In order to conserve the property they paid out for repairs, insurance, taxes, plumbing, water bills, new furnace, a total of $1145.48. They have collected $705 in rentals. On August 11, 1936, after the equity of redemption had expired, assuming the foreclosure to proceedings to be regular, Roy X. Tuttle and Olive M. Tuttle, his wife, gave a quitclaim deed of the property to May Peterson, Chicago, Illinois, the plaintiff herein. She waited until May 10, 1937, almost nine months before filing the bill of complaint in the instant case.

She charges that the foreclosure proceedings were fatally defective because the assignment of the mortgage to the R. F. C. and its reassignment to defendants was not set forth in the notice of sale. She further claims that the mortgage was usurious from its inception because the original mortgagee exacted paymentof mortgage tax, attorneys' fees, etc., claimed to amount to $30, in addition to 7 per cent. interest. Mathews v. Tripp, 285 Mich. 705, 281 N.W. 412. For these reasons she asserts that she is entitled to possession of the property and the sum of $250 as a reasonable rental value of the premises from and after August 3, 1936. If the loan were usurious, as claimed, and the foreclosure proceedings were null and void, the amount of the original mortgage would be reduced $30, or thereabouts, at its inception. Plaintiff, asserting usury, claims that the mortgage principal should be further reduced by the amount of $1249.50, the sum total of all interest paid by the original mortgagors; and also that there was no obligation to pay interest after January 7, 1933, a period of almost nine years, because interest on a usurious loan is forfeited; that the costs of the repairs to the old house and putting in a new furnace, etc., were all paid by defendants as volunteers, strangers to the title, and such amounts would not be recoverable. On the other hand, at the time of the hearing she had not offered to pay for the taxes, the cost of insurance, repairs, etc., all paid by defendants. She does not even offer to pay the legal rate of interest, although she filed the bill and defendants filed no cross-bill. See Hogan v. Hester Investment Co., 257 Mich. 627, 241 N.W. 881. The trial judge held against plaintiff for other reasons. He evidently deemed it important to have it judicially determined whether it was a fatal irregularity in the notice of foreclosure to omit any mention of the assignment of the mortgage to the R. F. C. and the reassignment to defendants. He held that such omission was not fatal. We agree with him.

The question has never been decided in this state. In Fox v. Jacobs, 289 Mich. 619, 286 N.W. 854, we found it necessary to pass on the question, and stated that ‘at most’ the omission made the foreclosure voidable but not void. We decided the case on the ground of the failure of plaintiff to offer to do equity and also because of laches. In that case, plaintiffs waited 20 months after the foreclosure sale; in the instant case, over 22 months. Appellants claim that the case differs from Fox v. Jacobs, supra, because in the instant case the property was purchased by the assignees of the mortgage and not by third parties.

The statute (3 Comp.Laws...